Global Warming Threatening Multinational Corporations

The first eight months of 2012, have been the hottest ever in the U.S. and global warming has become a business reality as many of the world’s largest companies perceive this climate change as an immediate threat to their operations. For many of the multinationals including PricewaterhouseCoopers, Wal-Mart, General Electric and L‘Oréal, reducing carbon emissions is one of the highest priorities before making investment decisions. We asked our Zintro experts what preventive actions they think the government should take.

Kendra Pierre-Louis, marketing and business development expert in sustainability, has concluded that even though small and medium sized business owners are oftentimes interested in integrating sustainability into their operations, they are still concerned about the costs incurred. “Yes, the short term costs of reducing carbon emissions are more than balanced in the medium term by significant financial savings courtesy of reduced energy bills, water bills, material waste reduction, and even improved worker productivity. But small and medium businesses can’t always risk their short-term cash flow on sustainability investments that will pay off in the long-term,” explains Pierre-Louis. From her point of view, the government can really add value to these businesses by offering low-interest loans or tax breaks for their sustainability investments. “Here in New York City, where Altanova Energy+Sustainability is based, we’ve found that local and regional government incentives have helped to mobilize small and mid-sized businesses to do just that. And, it’s not just businesses who benefit – governments benefit too because they no longer have to lay out the large capital investments necessary to expand electrical grids and water treatment facilities; in fact the whole community benefits,” she notes.

According to Jim Craig, an expert in corporate social responsibility and sustainability, the government should focus its preventive actions on the following three areas: policy, incentives and technology transfer. “Providing a robust policy framework ensures consistency and clarity for businesses and the wider community to do the right thing and support a shift to a lower carbon economy. Incentives, aligned to robust policy, help to engage across the spectrum from individuals through social enterprises, small, medium and large public and private sector organizations,” he explains. As Craig points out, the poorest nations are affected the most by climate change although their contributions to global warming are negligible compared to those of richer nations. “Deploying technology solutions can help adapt and mitigate the impacts felt by these poorer nations. The fast growing developing nations, Brazil, Russia, India, China, are currently on a similar trajectory to the developed nations, with regard to their energy mix. Relying on coal, oil and some nuclear,” he says. “Transferring low carbon, renewable energy and energy efficiency technologies can help to dial back the climate impacts, while at the same time, still allowing these economies to develop and grow.”

Jeff Waldon, a consultant on forest carbon, natural resources and biodiversity, believes that the next most cost effective solution to reduce greenhouse gas emissions is to support developing countries in the tropics in their efforts to reduce deforestation. “A system for measuring and monitoring emissions reductions from reducing deforestation has been developed and tested and found to be effective. The system is generally referred to as Reducing Emissions from Deforestation and Forest Degradation or REDD,” he notes. “These projects provide bonus benefits in biodiversity protection and community sustainable development. Emissions from deforestation in the tropics are roughly equivalent to all the worldwide emissions from the transportation sector.” Moreover, Waldon suggests the government to create demand for REDD in the private sector through a system of tax credits, required offsetting of emissions intensive industries and project-level insurance to reduce risk. “To halve emissions from deforestation by 2020 is estimated to cost $38 billion/year. The ultimate costs of global climate change are estimated in excess of a trillion dollars annually,” he adds.

Linda Riebel, psychologist and expert in environmental education, expects governments to take initial steps by modeling sustainable behavior through their own operations, in places where climate literacy is low and political will is absent. “Collective efforts among governing bodies can make a powerful statement and help build political will. For instance, The U.S. Conference of Mayors created its own Climate Protection Agreement, which has over 1,000 signatories. The U.S. Army has a special Environmental Command and is working to reach a net zero use of energy, water, and waste at the army’s installations,” she explains.  On the other hand, in places where there is awareness and readiness to act, she suggests that governments enact and vigorously enforce regulations.  “The success, for instance, of the Endangered Species Act in pulling listed species back from extinction shows that laws and regulations can work,” adds Riebel. “The willingness of big businesses such as Wal-Mart and General Electric to begin policing themselves, coupled with the established sustainability initiatives in other corporations, suggests that pushback from industry might be starting to wane, giving governments greater freedom to act to protect the planet we share.”

By Idil Kan

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